/ Gold / Gold News / India Gold Imports INCREASE 170% IN AUGUST Over Last Year

India Gold Imports INCREASE 170% IN AUGUST Over Last Year

September 5, 2017
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India has been suffering absolute economic destruction and social turmoil since PM Modi,without warning, demonetized two Indian bank notes some 10 months ago. Now, a new free-trade agreement has India importing gold big-time without being subject to TAXES or OVER-REGULATION.

Gold has been breaking-out in the Indian Rupee. Over the last six months, gold has been climbing, and over the last year, gold has formed a round bottom on the chart.

Even with the recent climb in the gold price, gold is on sale right now in India, thanks to a new free-trade agreement with South Korea. The discount because of the duty-free aspects of the trade agreement amount to about $13 an ounce.

India’s gold imports in August nearly tripled from a year ago, despite sluggish domestic demand as a recent tax change that allowed importers to ship in the yellow metal from South Korea without paying customs duty saw some traders purchasing heavily from the country, provisional data from consultancy GFMS showed.

Higher purchases by India, the world’s second biggest consumer, could support global prices, trading near their highest level in a year. It could also widen the South Asian country’s trade deficit.

The country’s August gold imports climbed to an estimated 60 tonnes from 22.3 tonnes a year ago, GFMS said. In the first eight months of 2017, the country’s imports rose to 617.5 tonnes, up 158 per cent from a year ago. “Trade houses imported nearly 20 tonnes from South Korea as they were not required to pay import duty,” Sudheesh Nambiath, a senior analyst with GFMS, a division of Thomson Reuters, said on Monday.

India imposes a 10 per cent import duty on gold, but this does not apply to countries with which it has Free Trade Agreements (FTAs), like South Korea. To avoid duty-free imports from those countries, India had previously imposed a 12.5 per cent excise duty.

This was scrapped along with other local taxes when a goods and services tax (GST) was introduced on July 1, allowing buyers to import gold from South Korea without paying import tax.

In August, traders were selling South Korean supplies at hefty discounts as demand was weak, said Daman Prakash Rathod, director at wholesaler MNC Bullion in the southern Indian city of Chennai.

Dealers in India were offering a discount of up to $13 an ounce in mid-August over official domestic prices that includes import tax.

Even if the numbers are sugar-coated, fabricated, or propaganda, if we are to take GFMS at face value, the increase in gold imports is staggering. Keep in mind that we do not have data for September, which is when the gold buying season really picks up in India.

Somewhat alarming, however, is that this is not sitting happy with some of the bureaucrats and politicians in India:

However, after realising the loophole the government on August 25 restricted imports of gold from South Korea.

So for all things considered, August was not even a full month worth of data, and the demand was still enormous. As governments around the world create one regulation to “fix” a problem, they create two new problems and just as many loopholes.

In the end, Indians will purchase gold, no matter how it arrives to them, either by over-regulation, free trade or smuggling, but for now, this is yet another indication that demand for precious metals is very, very robust.

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